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TMI Blog2008 (2) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... interpreting the order of the CIT (A) dated 5-2-1992 as open set aside i.e. setting aside the assessment order in toto and accordingly the A.O. was justified bringing to tax a new source of income while framing the de novo assessment? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the Excise Duty collected by the assessee on grey fabrics was in the nature of trading receipts and hence disallowable u/s. 43B of the Act ? (3)Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the bank guarantee furnished by the assessee which was taken by the assessee by depositing certain amount in bank fixed deposit as margin money did not tantamount to actual payment and so section 43B is applicable?" 2. The Assessment Year is 1987-88 and the relevant accounting period is year ended on 08.07.1986 (Ashadh Sud Bij). The assessee, a Private Limited Company declared total income of Rs.1,08,320/-. The Assessing Officer framed assessment at a total taxable income of Rs. 17,57,329/- u/s.143(3) of the Act vide assessment order dated 30.03.1990. In the course of framing the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Addition on account of coal as discussed in para 6 above 42,660 3. Addition on account of empty drums and waste materials as discussed in para 6 above 25,000 4. Addition on account of work in process as discussed in para 8 above. 4,04,660 5,08,360" 5. However, in the body of the assessment order detailed discussion has been made in relation to unpaid excise duty amounting to Rs.81,62,006/- by holding that same was not allowable u/s. 43B of the Act. This addition is reflected in the order made u/s. 154 of the Act on 08.04.1994. As the order u/s. 154 of the Act was not available on record, the learned Advocate for the assessee was permitted to place the same on record with the consent of the other side. 6. The assessee carried the matter in Appeal before the Commissioner (Appeals) and one of the principal ground of challenge was regarding jurisdiction of the Assessing Officer to bring to tax an amount of excise duty collected but not paid by invoking provisions of section 43B of the Act. The Commissioner (Appeals) vide order dated 25.01.1995 rejected the contention regarding absence of ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Mills (P.) Ltd. Vs. CIT (Cal.) (1979) 120 ITR 861 [3] CIT Vs. Late Jawaharlal Nagpal (1988) 171 ITR 136 (M.P.) (Indore Bench) [4] CIT Vs. S.V. Divakar (1993) 201 ITR 914 [5] CIT Vs. Mahindra And Company (1995) 215 ITR 922- (Raj.)(Jaipur Bench) [6] CIT Vs. D.N. Dosani , (2006) 280 ITR 275 [7] CIT Vs. Rai Bahadur Hardutroy Motilal Chamaria , (1967) 66 ITR 443. 10. Mr. M.R.Bhatt, learned Senior Standing Counsel appearing on behalf of respondent supported the order of the Tribunal by referring to provisions of section 251 of the Act which deals with powers of the appellate authority to point out that there was no dispute that Commissioner (Appeals) was entitled to set aside the assessment order and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by Commissioner (Appeals). That in absence of any directions being given by Commissioner (Appeals) the Assessing Officer was entitled to reframe the assessment afresh in totality considering that the set aside was an open set aside and not a conditional or a limited set aside. That the latter part of section 251(1)(a) of the Act provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty; (c) in any other case, he may pass such orders in the appeal as he thinks fit. (2). The Appellate Assistant Commissioner [or, as the case may be, the Commissioner (Appeals)] shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation :- In disposing of an appeal, the Appellate Assistant Commissioner [or, as the case may be, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner [or, as the case may be, the Commissioner (Appeals)] by the appellant". 13. On a plain reading of the aforesaid provisions it becomes apparent that the Appellate Authority is entitled to either confirm, reduce, enhance or annul the assessment; or the Appellate Authority may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by the Appellate Authority after making such further inquiry as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the order of assessment, but was not in challenge in appeal before the Appellate Authority, the Appellate Authority has to give a reasonable opportunity of hearing before processing such a source of income and enhancing the assessment. 14. A fortiori if it is not open to the Appellate Authority to enhance an assessment of income without issuing show cause notice one can never contemplate that the Appellate Authority can set aside an assessment so as to enable the Assessing Officer to exercise powers of enhancement vested in the Appellate Authority without the Appellate Authority discharging the statutory obligation cast on the Appellate Authority by virtue of provisions of section 251(2) of the Act. 15. Similarly even where an assessment is set aside simpliciter, without any enhancement proposal, it is always in context of the appeal against an order of assessment and cannot be read to mean that the Appellate Authority granted powers to the Assessing Officer in relation to items of assessment which were never forming part of Appeal before the Appellate Authority. At the cost of repetition it is required to be noted that processing a new source of income which was on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the amount of Rs.5,85,000 and to hold that it was taxable as undisclosed profits in the hands of the assessee. We are unable to accept the argument put forward on behalf of the appellant as correct. It is true that the Income-tax Officer has referred to the remittance of Rs.5,85,000 from the Calcutta branch; but the Income-tax Officer considered the despatch of this amount only with a view to test the genuineness of the entries relating to Rs.4,30,000 in the books of the Forbesganj branch. It is manifest that the Income-tax Officer did not consider the remittance of Rs.5,85,000 in the process of assessment from the point of view of its taxability. It is also manifest that the Appellate Assistant Commissioner has considered the amount of remittance of Rs.5,85,000 from a different aspect, namely, the point of view of its taxability. But since the Income-tax Officer has not applied his mind to the question of taxability or non-taxability of the amount of Rs.5,85,000 the Appellate Assistant Commissioner had no jurisdiction in the circumstances of the present case to enhance the taxable income of the assessee on the basis of this amount of Rs.5,85,000 or of any portion thereof. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person wanting to open a particular door is required to apply the correct key which matches the concerned lock. Therefore, in proceedings to give effect to an order under section 263 of the Act, the Assessing Officer cannot be permitted to undertake an exercise not warranted by the legislative scheme". 18. Similarly the position in law is well settled that an assessment which is reopened u/s. 147 of the Act for bringing to tax an escaped income cannot be converted by an assessee into an entirely fresh assessment by making claims which were not originally made. The principle in law is, that every particular provision operates within the limited sphere for which the provision is enacted and hence powers u/s. 251 of the Act granted to an Appellate Authority cannot be used to render other provisions of the Act like sections 154, 147, 263 and 264 of the Act otiose or redundant. 19. Applying the aforesaid tests to the facts on hand it becomes apparent that when the assessment order was originally framed the Assessing Officer had not considered the issue as regards taxability or non taxability of excise duty collected in context of provisions of section 43B of the Act. The assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same was not challenged by way of an Appeal. The only remedy that an assessee would have in such circumstances is seeking relief u/s. 264 of the Act in accordance with law. 20. In the aforesaid set of facts and circumstances and in light of what is stated hereinbefore it becomes apparent that if the Appellate Authority could not have processed the item relating to unpaid excise duty the order of set aside in relation to six items of additions alongwith interest charged could not have been read by the Assessing Officer to expand jurisdiction of the Assessing Officer in the course of fresh assessment made in pursuance of directions issued by Commissioner (Appeals) on 05.02.1992. Hence, the Tribunal was in error in upholding the view expressed by Commissioner (Appeals) in the second round vide order dated 25.01.1995. Question No.1 referred for the opinion of this Court is therefore answered in the Negative i.e. in favour of the assessee and against the Revenue. 21. In light of the answer to question No.1 it is not necessary to answer question Nos. 2 and 3 and the same are left unanswered. Reference stands disposed of accordingly with no order as to costs. - - TaxTMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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